Centralized versus Decentralized Inventory Control in Supply Chains and the Bullwhip Effect

Zhan Qu, Horst Raff

This paper constructs a model of a supply chain to examine how demand volatility is passed upstream through the chain. In particular, we seek to determine how likely it is that the chain experiences a bullwhip effect, where the variance of the upstream firm's production exceeds the variance of the downstream firm's sales. We show that the bullwhip effect is more likely to occur and is greater in size in supply chains in which inventory control is centralized rather than decentralized, that is, exercised by the downstream firm.

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Year of publication:	October 2017
Authors:	Zhan, Qu ; Raff, Horst
Publisher:	Dresden : Technische Universität Dresden, Fakultät Wirtschaftswissenschaften, Center of Public and International Economics
Subject:	bullwhip effect \| production smoothing \| inventory \| supply chain \| volatility \| stockout avoidance \| Lieferkette \| Supply chain \| Bullwhip-Effekt \| Bullwhip effect \| Lagerhaltungsmodell \| Inventory model \| Lagermanagement \| Warehouse management \| Theorie \| Theory \| Volatilität \| Volatility \| Bestandsmanagement \| Inventory management

Extent:	1 Online-Ressource
Series:	CEPIE working paper. - Dresden : CPIE, ISSN 2510-1196, ZDB-ID 2870036-3. - Vol. no. 17, 17
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Arbeitspapier ; Working Paper ; Graue Literatur ; Non-commercial literature
Language:	English
Other identifiers:	hdl:10419/170529 [Handle]
Classification:	L22 - Firm Organization and Market Structure: Markets vs. Hierarchies; Vertical Integration ; L14 - Transactional Relationships; Contracts and Reputation; Networks ; D92 - Intertemporal Firm Choice and Growth, Investment, or Financing ; M11 - Production Management
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10011736756